I would imagine that by now most of you have discovered Blake Masters’ notes from his Stanford class with Peter Thiel. In class 10, Marc Andreessen was the guest speaker and there were a number of gems in Blake’s write-up that I particularly wanted to highlight and in a few cases comment upon.
Mark Andreessen:
It’s hard; entrepreneurs are congenitally wired to be too early. And being too early is a bigger problem for entrepreneurs than not being correct. … For entrepreneurs, timing is a huge risk. You have to innovate at the right time. You can’t be too early. This is really dangerous because you essentially make a one-time bet. It’s rare are to start the same company five years later if you try it once and were wrong on timing.
My comment: this is very true. Unfortunately, a failed startup often leaves the founder with a lot of baggage. But sometimes great things can happen when someone takes another run at an idea, like Dennis Crowly with Foursquare.
MA:
There are two types of people: those who experienced the 2000 crash, and those who did not. The people who did see the crash are deeply psychologically scarred. Like burned-my-face-on-the-stove scarred. They are irreparably damaged. These are the people who love to talk about bubbles. Anywhere and everywhere, they have to find a bubble.
My comment: bizarre, as Marc himself went through the dotcom era and is hardly scarred into uselessness. If this is a correct paraphrasing of Marc’s words, it is a ridiculous generalization. There are a lot of great companies that have been started by folks who lived through the bubble bursting. I hate Silicon Valley age-ism. Entrepreneurship and creativity is a state of mind, not an age bracket.
MA:
The number one reason that we pass on entrepreneurs we’d otherwise like to back is focusing on product to the exclusion of everything else. We tend to cultivate and glorify this mentality in the Valley. We’re all enamored with lean startup mode. Engineering and product are key. There is a lot of genius to this, and it has helped create higher quality companies. But the dark side is that it seems to give entrepreneurs excuses not to do the hard stuff of sales and marketing. Many entrepreneurs who build great products simply don’t have a good distribution strategy. Even worse is when they insist that they don’t need one, or call no distribution strategy a “viral marketing strategy.”
My comment: great points, but within it is a misunderstanding of Eric Ries’ lean startup, which is about de-risking all parts of the business including the business model and distribution strategy, not just product. Aside: while I don’t always use Alex Osterwalder’s business model canvas, it has the strong benefit of forcing teams to think holistically.
Peter Thiel:
The goal is to catch a big wave. If you think a big wave is coming, you paddle really hard. Sometimes there’s actually no wave, and that sucks. But you can’t just wait to be sure there’s a wave before you start paddling. You’ll miss it entirely. You have to paddle early, and then let the wave catch you. The question is, how do you figure out when the next big wave is likely to come? It’s a hard question. At the margins, it’s better err on the side of paddling where there’s no wave than paddling too late and missing a good wave. Trying to start the next great social networking company is current wave thinking. You can paddle hard, but you’ve missed it. Social networking is not the next wave.
My comment: it really does suck when your bet turns out not to be a wave. In 2006/2007 at Electric Sheep, we thought that the 3D metaverse was going to be a wave and paddled our asses off to initial success only to find it evaporate. The folks who instead bet on the Facebook wave were much better off.
MA:
What’s ideal is to have a founder/CEO who is a product person. Sales operators handle the sales force. The sales force does not build the product! In poorly run software companies, sales orders product around. The company quickly turns into a consulting company. But if a product person is running the company, he or she can just lay down the law.
My comment: I very much agree with this. You want to be very aware of the customer and the sale but not let sales “wag the dog”, so to speak. If you want a product-centric company, you want a product-centric leader who still gets the importance of sales and marketing.
MA:
The best designers are the software-intensive ones, who understand it at the deep level. It’s not just about surface aesthetics.